April 28, 2017

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Authors Posts by Ryan Ong

Ryan Ong

Ryan Ong
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by Ryan Ong

WHY do venture capitalists (VCs) need such big offices? It’s a common question, but if you know any, the answer is obvious. It takes about 1,500 square feet, minimum, to house the ego of one VC.

But VCs have some right to that kind of arrogance. They’re the ones who drive innovation, at huge risks to themselves. They’re the cowboys of the financial world, who take extreme risks to advance society. And now, we’re likely to see more people participating in venture capital, with the Monetary Authority of Singapore (MAS) simplifying the rules:

by Ryan Ong

SENTOSA Cove is becoming a ghost town, with vacancies estimated at 9.6 per cent in the fourth quarter of 2016. On top of that, more than half of Sentosa Cove’s property sales last year (15 out of 21) were losses. Not the kind of $10,000 loss that a retiree complains about at the coffee shop either; at The Turquoise, one of the more prominent Sentosa Cove projects, a unit that was bought for $7.16 million was resold at $3.8 million.

Now in 2015, when Sentosa Cove properties fell 36 per cent from their last peak (2011), it was thought that prices there were “bottoming out”. But if anything, the downward trend seems to be accelerating. Here’s why Sentosa Cove may be locked in a policy-created tailspin:

by Ryan Ong

PRESIDENT Donald Trump disappointed the markets last week, when his news brief failed to touch on expected stimulus measures. Last year, Japanese Prime Minister Shinzo Abe announced a USD$73 billion (SGD$103.7 billion) stimulus measure, in the vain hope he might actually convince a Japanese person to spend a yen someday. And with Singapore’s upcoming Budget 2017, business owners are probably hoping for policies that provide a stimulus. But what exactly is a stimulus?

by Ryan Ong

There may be too many property listing sites for Singapore

WITH the addition of two new online services last year (Ohmyhome and Yotcha), the online property market has gotten crowded. Along with PropertyGuru, 99.co and StreetSine, all of them are now locked in a constant fight for your attention. And they all provide the same basic service, which is comparison.

All of this is supposed to be good for “the market”. Property agents, buyers and sellers are supposed to have it easier than ever. Listing sites are much cheaper than traditional marketing methods, such as classified ads – 99.co charges just $588 per year for 100 listings, while PropertyGuru (which is the granddaddy of property sites in Singapore) charges $2,240 per year.

Contrast this with traditional print advertisements, which can end up costing those same amounts for just a single ad.  And of course, buyers now have the luxury of looking for property on their phone, on the bus or at home.

In some respects, these sites have succeeded in changing Singapore’s property market. Some of the changes that have been caused by these sites are:

  • Buyers are quicker at spotting abnormal prices
  • The property business is becoming more entwined with the online media business
  • Buyers are somewhat better informed

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1. Buyers are quicker at spotting abnormal prices

Most property portals, such as 99.co or StreetSine, don’t just list the price of a specific property. They also show the prices of other properties in the same vicinity, which lets buyers work out the average (or median for the more mathematically inclined) price per square foot. For example, look at this screenshot:

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You can see almost immediately if a unit is exceptionally expensive or cheap. Here’s another example, which also tracks prices in the general neighbourhood:

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In the past, buyers had to dig through records themselves to check transaction histories. Portal listings practically guarantee every buyer is less likely to get ripped off, even first-timers who may not know where to check the price history. (You can check the Urban Redevelopment Authority’s records here by the way.)

The ease of information impacts our property market in ways that go beyond the portal’s user numbers. Even casually browsing the site could influence buyers and sellers.

 

2. The property business is becoming more entwined with the online media business

One major difference to the property market is that now, sellers have to fight for online visibility. Fewer buyers will walk around a neighbourhood for two hours, shopping for potential sales. They find their prospects via price and location filters on a portal site.

This leads to property agents and developers now having to think like media companies, instead of just real estate experts. If someone types “condo-jurong-under $800,000” into a search bar, every site wants to be the first result they get. As such, an increasing number of developers and agents are now also learning to think in terms of Search Engine Optimisation (SEO) and content marketing. In Singapore’s property market, “e-commerce” will soon lose its meaning – e-commerce is commerce.

At present, developers and agents are basically paying portal sites (or even private bloggers) to get them visibility. But it’s just a matter of time before they learn to produce their own online content.

Which leads to the third thing…

 

3. Buyers are somewhat better informed

Property news used to be esoteric. Go back to the 1980s; issues like stamp duties and deferred payment schemes were random words that made no sense to buyers. Today, most buyers – even those who are buying their first home – have some familiarity with concepts like the Qualifying Certificate or Additional Buyer’s Stamp Duty.

They can’t help it. Portal sites fight tooth and nail for high visibility online and that results in a non-stop deluge of content. Google one project and you’ll find a few hundred pages breaking down the pros and cons, and speculating on potential gains. And in order to get ahead, portal sites also churn out information on how loans work, what agents do, what the Option to Purchase is, and so forth.

That’s all a sneaky way to get visibility. When you type “what is an Option to Purchase”, every portal site wants to be the first to answer your question.

This results in buyers who are somewhat better informed. I say “somewhat better” because, within the mass of content, buyers are also absorbing information that persuades them to buy.

 

What hasn’t and probably won’t change no matter how many portal sites we get?

Portal sites are also credited with big industry changes, despite evidence to the contrary. They are:

  • Decreased use of property agents
  • Major changes in property prices

 

1. Decreased use of property agents

This is the number one accusation hurled at listing sites, like Yotcha. But that’s putting the cart before the horse.

In 2010, only 11 per cent of HDB resale buyers and sellers handled transactions without an agent. By 2013, that number was up to around 25 per cent. HDB itself has concise guidelines for buyers and sellers wanting to do this. You’ll note that Yotcha (and the app Ohmyhome, which bypasses the need for property agents) came about in 2016.

In other words, services like Yotcha came about as a response to fewer people using property agents. They are not a “cause” of it.

The commission of a property agent in Singapore is around 2 per cent of the sale price for sellers. On a $350,000 flat, that’s a hefty $7,000. So it’s not surprising that most people will at least try to muddle through it first and then call in an agent as a last resort.

Of course, this isn’t to say that Yotcha won’t compound the problem – it is too new to tell. But in the words of Billy Joel, it didn’t start the fire.

 

2. Major changes in property prices

So price comparison drives prices down, right? That’s a supposed benefit of comparison platforms, but we should be careful not to exaggerate the impact.

Property prices move for a huge variety of reasons. Property prices in Singapore are going down because of cooling measures by the G, a weakening economic outlook, fewer rich expats due to the slump in oil and gas and finance, and many other possible factors. One of those many factors may be the increased use of portals and price comparisons. But we can’t know that for sure or guess to what degree it contributes to falling prices.

The flip side is also true. If there’s a huge hype for a particular area, prices will be inflated. And the comparison platforms will reflect and reinforce that. When you can see everyone hiking prices, you will too.

It’s more accurate to say that various portal sites reflect the market sentiment. Property portals probably won’t be the catalyst for major price changes, no matter how many of them we have.

 

Featured image House/Home Inspection by Flickr user Mark Moz. (CC BY 2.0) 

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by Ryan Ong

BACK when President Donald Trump said he was going to fight a trade war with China, the business community only took him half-seriously. Any Trump statement was assumed to be 80 per cent bovine excrement, 10 per cent badly distorted fact and 10 per cent Russian bribery. But now that he’s in power, Trump seems serious about helping America to commit suicide. So stock up on canned food, and start learning how to conduct DIY dental surgery. We don’t know whether America or China will win this fight, but we sure as hell know we’ll be the ones who lose:

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by Ryan Ong

EVERYTHING is a commodity these days. Facebook likes, views on your blog, forgiveness in a mega-church, and now even your insurance policy. For those of you who bought an endowment policy, and then regret it, there’s a way out. In case you haven’t heard it blaring over a radio advertisement yet, there are people out there who want to buy your policy:

by Ryan Ong

EVERYTHING is faster and more efficient in the age of digital banking, including going bankrupt. When you consider you can get four times your monthly income in cash, in 15 minutes, it’s pretty amazing we’re all not stress eating caviar while looking at our monthly bills. For those without self-control though, the Association of Banks in Singapore (ABS) has made a help package – in the form of a new debt consolidation programme:

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by Ryan Ong

HOUSES are valuable assets, right up till you realise you’re short on cash. After the tenth straight week of donating blood just for free Milo, that sea view unit will seem a lot less appealing. If only you could, oh, unpay some of the money you’ve put in the mortgage, or get some money out of your house without renting or selling right? Well, you could:

by Ryan Ong

HARD or soft, how would you like your country’s implosion? That was pretty much the final “vote” Britain was left with since they have decided on Brexit. And with it choosing the former, the pound has taken another, well, pounding of late. It has fallen 19 per cent against the US dollar, largely because the UK needs the EU more than the other way around. But perhaps new British Prime Minister Theresa May hasn’t got much of a choice either way: